There’s No Such Thing As a One-Size-Fits-All Professional Liability Policy

When a client comes to you for your expert advice — no matter how challenging their request — the professional thing to do is help. But while you’re focused on their challenges, don't forget that you could face legal action as a result of the advice you give. Any one of your vendors, clients, business associates or suppliers can allege harm as a result of your guidance, and file suit.

This is where Professional Liability (also known as errors and omissions or E&O) insurance can help. There is no one-size-fits-all Professional Liability policy, so you should ensure that your policy covers you as broadly as possible while also being as specific as possible to your industry and market, and including all of your potential exposures.

Here are four best practices to help you avoid Professional Liability claims:

1. Correctly identify all the professional services you offer to minimize coverage exclusion.

Professional services firms often assist their clients in a variety of ways. But unless your policy’s definition of professional services includes everything you do — especially non-traditional services or services not typically provided together — you could face exclusions and coverage denial in areas not explicitly mentioned. For example, an investment advisor may not be covered to function as an investment broker.

2. Make sure the policy’s coverage exclusions or limitations don’t overlap with your exposures.

Each carrier and industry will have its own policy language and typical exclusions. Consider all potential exposures and amend policy language as necessary. For example, a technology services firm that has developed an app used to collect data should not buy a policy with a data-collection exclusion.

3. Avoid late reporting and abide by the carrier’s claim requirements.

Failure to report a claim within the required time frame — typically no later than 30, 60, or 90 days post-policy period — could be cause to deny a claim. Similarly, you may be required to use pre-selected vendors of claims services, including attorneys and consultants. Know and abide by the requirements of your policy.

4. View your Professional Liability policy as one piece of a larger puzzle.

When all your policies line up together, gaps in coverage will be minimized, if not eliminated. For example, if someone sues you or your company for harassment, your Professional Liability policy won’t respond, but you would be protected by Employment Practices Liability coverage; a general liability policy won’t protect your leaders against a suit, but a Directors and Officers policy would.